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(a) 85 percent of such excess, plus (b) the lesser of (i) one-
half of the Social Security benefits received during the year, or
(ii) one-half of the difference between the adjusted base amount
and the base amount of the taxpayer, or (2) 85 percent of the
Social Security benefits received during the year. Sec.
86(a)(2). The base amount and the adjusted base amount for the
year at issue for a joint return are $32,000 and $44,000,
respectively. Sec. 86(c)(1)(B) and (2)(B). Petitioners do not
challenge respondent's computation under this formula that
results in $4,679 of their Social Security benefits' being
includable in gross income. Petitioners contend only that
respondent never challenged their omission of such income on
prior years' returns. The mere fact that omission of such income
on petitioners' prior returns was never questioned by respondent
is not a basis for the exclusion of such income on subsequent
returns that are questioned by respondent. Each taxable year
stands alone, and respondent may challenge in a succeeding year
what was condoned or agreed to in a former year. Boatner v.
Commissioner, T.C. Memo. 1997-379 (citing Auto. Club v.
Commissioner, 353 U.S. 180 (1957)), affd. 164 F.3d 629 (9th Cir.
1998). Respondent, therefore, is sustained in including the
subject income on petitioners' 2000 return. As noted above,
petitioners are entitled to a dependency exemption deduction for
their son for the year at issue based on respondent's concession.
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Last modified: May 25, 2011